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As real estate investors, prospective homebuyers and brokers look back, 2017 could probably be called "The Year of Real Estate Records." Dozens of major real estate markets saw rent and home prices continue to rise, sometimes even hitting all-time highs, while building on years of steady growth since the housing collapse a decade ago. It’s truly striking, and with each day that passes, 2018 shows few signs of slowing down.

In specific elevated markets such as Los Angeles, San Francisco and Manhattan, this growth has led bearish real estate investors to worry about the possibility of a real estate bubble. As a luxury broker who works closely with Los Angeles’ homeowners and prospective homeowners every day, it’s my business to understand the ins-and-outs of the market to best help my clients. And as it turns out, there’s a lot of misleading (or flat-out false) information out there about LA’s elevated home prices.

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Below, I clear up three of the biggest myths about the LA real estate bubble to help you successfully navigate the market in 2018.

Myth #1: High home prices signal a real estate bubble.

It’s a natural rhythm: Home prices rise, fall and rise again. Historically speaking, this rhythm has also resulted in consistent growth over time in the United States — with one major recent exception. The housing crisis of the late 2000s was a wake up call, demonstrating that real estate wasn’t impervious to dangerous bubbles. However, as median housing prices in markets such as Los Angeles have reached 2007 peaks, some real estate investors have wrongfully assumed that it’s a sure sign of a bubble.

In truth, the reality is a bit more complex. Many signs can point to a bubble, but one of the least reliable is the median home price itself. Home prices in 2007 were certainly elevated, but the bubble was caused by risky, unsustainable lending practices. Buyer demand, borrower-friendly mortgage rates and a robust economy all play their own parts in rising home prices — and are actually fairly sustainable when balanced.

So while you should always approach an elevated market with care, there’s usually a lot more that goes into that median home value than meets the eye.

Myth #2: Real estate bubbles are systemic.

It should be no surprise that some predictions aren’t reliable when, a decade later, so much real estate forecasting is still calibrated to the subprime mortgage crisis. For example, at that time, the underlying systemic real estate bubble left no U.S. market untouched and impacted our economy and economies across the globe. Unfortunately, some real estate pundits learned the wrong lesson and now incorrectly assume a bubble in one market will soon mean a bubble everywhere.

Let’s dissect why this isn’t true. The economic factors, housing supply, construction data and population trends are just too different. Even in LA, the real estate market is drastically different than it was 10 years back — and LA’s market is different from Portland, Cleveland, Chicago and dozens of other cities. Yes, San Francisco’s home prices may be astronomically high, but does that mirror what’s going on in Beverly Hills? Not even close.

Myth #3: If a market has no bubbles, it has no problems.

I cannot and would not fault anybody for being overly cautious when they’re diving into a new market. Success in real estate requires time, research and careful consideration. In fact, one of the most dangerous myths about LA’s real estate bubble is actually the opposite: If there isn’t a real estate bubble, you don’t have to worry at all.

It goes without saying that home prices in Southern California are high. Affordable housing is one of the biggest challenges facing Los Angeles, as well as other major markets such as San Francisco and Manhattan. And while the economic factors behind LA’s current housing prices appear to be stable now, they can always fluctuate based on demand, construction, income and even whether natural disasters deter potential new residents or current residents who choose to move to another state.

Being cautious in real estate should always be your first instinct, regardless of what the headlines say.

LA’s Real Estate Bubble: Myths Vs. Facts

Housing prices in LA may be high, but before you get caught up in the real estate bubble hype, you need to cut through the myths and get to the facts. As a broker, I see incredible, affordable homes for individuals, families and real estate investors throughout Southern California every single day. Of course, every market has its pitfalls, but there are tried-and-true ways to avoid them. Do your research, look for the opportunities that make sense for you, and take every piece of advice with a grain of salt.